Passed into law on March 27, the Paycheck Protection Program (PPP) was established as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The PPP originally provided $349 billion in forgivable loans that businesses could use to cover paying employees, building rent, utilities and mortgage interest.
After the first round of the Paycheck Protection Program (PPP) ran out in just 12 days, the AICPA issued a news release that day urging Congress to quickly approve additional funding for the program.
The U.S. Small Business Administration (SBA) released data on April 16 showing that the program had approved 1,661,367 loans through 4,975 lenders.
The new legislation will provide $370 billion additional pandemic-relief funding for small businesses.
Additional funding approved by Congress
This additional funding was approved last week as part of a larger economic relief package.
This includes $60 billion in loans to be made by small banks, credit unions, minority-owned banks, and other small lenders. Of that total:
- $30 billion is for loans by FDIC-insured banks and credit unions that have assets between $10 billion and $50 billion.
- An additional $30 billion is for lenders with less than $10 billion in assets. Those include community banks, credit unions, and community development financial institutions, which provide loans to low-income communities and to people who lack access to financing.
Another $60 billion in small business funds not included in the PPP program will go to the SBA’s Economic Injury Disaster Loan (EIDL) program.
- The EIDL provides working capital loans of up to $2 million that small businesses may use to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the impact of a disaster.
- The interest rate is 3.75% for small businesses and 2.75% for not-for-profits.
- Of that $60 billion, $10 billion will go to small business grants of up to $10,000 for disaster relief that do not have to be repaid.
If you have questions about how the new SBA funding will affect your small business, or are wondering about tax implications, contact the experts at Morgan & Associates using our form below. We’ll get back to you quickly!